FTSE 100 Support 6955 6939 6914 6911 6837
FTSE 100 Resistance 7014 7017 7035 7042

Good morning. The FTSE 100 was pretty strong yesterday (as expected for the start of the month and quarter) with the rise to the 6969 resistance level from the open, and then a bit more. Unfortunately we never got the little dip to start the day down to the support, instead 6900 held well and we rose to almost 7000. Unfortunate for the bulls that the bears suppered their charge at 6995 (twice!). Its distinctly possible that we pop a bit higher as there are probably a few more shorts that need to be squeezed and stopped out, resistance is around the 7017 and 7035 areas at the moment. Support for today is around 6939.

US & Asia Overnight from Bloomberg

The dollar strengthened for a sixth day versus the yen and sovereign bonds fell as American manufacturing data and hawkish comments from a Federal Reserve official spurred bets that U.S. interest rates will be raised this year. Most Asian stocks advanced.

A gauge of the greenback’s strength climbed to a two-week high and yields on benchmark U.S. Treasuries increased for a third day. Sovereign bonds in Australia dropped by the most in a year and South Korea’s fell by the most in three weeks as trading resumed following holidays on Monday. About five shares rose for every three that fell on the MSCI Asia Pacific Index, with Japanese exporters getting a boost from the depreciating yen. Crude oil retreated from a three-month high.

American manufacturers’ output and new orders expanded in September, spurring confidence that the world’s biggest economy is robust enough to withstand higher interest rates. Fed Bank of Cleveland President Loretta Mester said Monday she expects the case for a rate hike to remain “compelling” at the next review in November, having been one of three policy makers to dissent in favor of an increase at the September meeting. The probability of U.S. borrowing costs being raised by December stood at 61 percent on Monday, up 10 percentage points from a week earlier, futures show.

“The data is suggesting the Fed will likely raise rates in December,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “We’ll probably have a couple of months of stronger data gauging from the strength of new orders. The yen weakness is supportive of Japanese exports.”

Fed Bank of Richmond President Jeffrey Lacker is due to speak Tuesday and may touch on the outlook for U.S. monetary policy. Australia’s central bank kept its benchmark interest rate at a record-low 1.5 percent following Philip Lowe’s first policy meeting as governor, a decision forecast by all of the economists in a Bloomberg survey. The Reserve Bank of India is also due to review policy for the first time since a leadership change and 44 percent of the analysts polled were looking for a rate cut. Markets in mainland China are closed all week for a holiday.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose 0.2 percent as of 12:50 p.m. Tokyo time. The yen slid 0.5 percent versus the dollar, extending its longest run of losses since August.

“Better-than-expected U.S. data are reminding markets that November remains a live meeting” for the Fed, said Christopher Wong, a foreign-exchange strategist at Malayan Banking Bhd. in Singapore.

The pound fell as much as 0.2 percent to $1.2817, near a July level of $1.2798 that was the weakest in three decades. British Prime Minister Theresa May said over the weekend that she’ll begin the process of withdrawal from the European Union in the first quarter of 2017 and curb immigration, stoking speculation the U.K. is headed toward a so-called hard Brexit — with limited access to the EU’s single market.

Bonds

Australia’s 10-year bonds fell 1.1 percent from Friday’s close and their yield surged 12 basis points to 2.08 percent. South Korean bonds due in a decade snapped a seven-day winning streak, lifting their yield by five basis points to 1.45 percent.
The rate on similar-maturity U.S. Treasuries rose one basis point to 1.63 percent, after climbing six basis points over the last two sessions. A Treasury market gauge of inflation expectations advanced to a four-month high on Monday, spurred by Mester’s comments and an increase in oil prices.

Japan’s 10-year bonds erased earlier losses after demand strengthened at a sale of the tenor, with the bid-to-cover ratio increasing to the highest since June. The securities yielded minus 0.07 percent, compared with minus 0.055 percent ahead of the auction.

Stocks

The MSCI Asia Pacific Index added 0.1 percent, after gaining 0.6 percent on Monday. Japan’s Topix gained 0.6 percent, with Toyota Motor Corp. advancing 1.7 percent. Hong Kong’s Hang Seng Index was little changed, while benchmarks in Australia and New Zealand were the region’s only decliners.

“Overall, the U.S. economy appears to be on a growth track,” said Mitsuo Shimizu, a deputy general manager at Japan Asia Securities Group Ltd. in Tokyo. “As some had been expecting a deterioration in the manufacturing figures, alleviation of such worries will help Japanese shares rise.”

China Evergrande Group jumped as much as 12 percent in Hong Kong after announcing a plan to shift most of its property assets into a listed company in Shenzhen, where valuations are higher. Hyundai Motor Co. climbed in Seoul by the most since July after data showed the company’s sales increased last month in the U.S. and India.

Futures on the S&P 500 added 0.1 percent, while contracts on the U.K.’s FTSE 100 Index were down 0.2 percent.

Commodities

Crude oil fell 0.5 percent to $48.57 a barrel in New York, losing ground for the first time in a week before data that’s forecast to show U.S. crude stockpiles expanded. Production from Libya, among countries exempt from an OPEC output cut, rose to 500,000 barrels a day and will climb further this month, a state oil company official said.

Gold fell for a sixth day, its longest losing streak since August. Growing expectations for a U.S. rate hike weigh on the metal as it doesn’t bear interest.

Most industrial metals retreated in London, led by a 0.7 percent drop in lead, after Deutsche Bank AG warned that demand driven by China’s property sector will fade next year. An LME index tracking the metals moved into a bull market last week as economic data pointed to a stronger economic outlook for China, the top commodities consumer. [Bloomberg]

FTSE 100 Outlook and Prediction

If the bulls test the 6995 area today then that resistance level that held twice yesterday is likely to break and we should see 7015 (10 day Bianca) and also I think the 7035 area which is the 10 day Raff. Recently the Bianca channels haven’t been acting with as much force as usual, while the Raffs are – the 10 day at 6993 held yesterday. So, the 10 day Raff is worth a short today again. There is quite a lot of talk about 7200 and other such targets – usually a sign that we wont get that high when the media is bullish, and as mentioned a few times I think we are still going to get a leg down once this rally exhausts itself. Not worth trying to guess the top though for the moment. For today there is support at the pivot at 6955, then the 100 Hull moving average on the 2 hour at 6940. I am thinking we see 7030 before 6930 though. It will all depend on the bulls being quick out the blocks to start with, but those are the main levels I am watching today – 6940 and 7033. We have had the pattern of bull Monday, bear Tuesday a lot recently so might well see that again today. Something else to bear in mind anyway!